Ostrom's Dichotomy

Before getting into what Ostrom argues, definitions need to be explained in order to provide context and understanding how her polycentric argument is free market at its roots. Part of her argument circles around the dichotomy foundation of the economic system. She explains there are two separate economic theories based from “the mid-twentieth century” and “the dominant scholarly effort was to try to fit the world into simple models and to criticize institutional arrangements that did not fit (pg 409).” These two contrasting systems are the free market and government controlled. Ostrom simply states, “the market was seen as the optimal institution for the production and exchange of private goods (pg 409).” To provide a more complete definition
She proposes that the “dichotomous view of the world explained patterns of interaction and outcomes related to markets for the production and exchange of strictly private goods, but failing to “adequately accounted for internal dynamics within private firms (pg 409).” She points out that this simple system cannot explain the complex nature of humanity and economics. It does not “deal with the wide diversity of institutional arrangements that humans craft to govern, provide, and manage public goods and commonpool resources (pg 409).” The dichotomous economic worldview does not do the proper job of illustrating the interaction between human nature, culture, politics, and economics. Ostrom begins to explore and conclude that there needs to be a more complex understanding. There a number of different reasons for this view. She points out two types of goods, which follow the dichotomous economic narrative. That includes pure private goods that are excludable, where individuals have to buy—pay for— the goods in order to consume it, and rivalrous, where once an individual consumes the good, no one else can. Then there are public goods, in which they are both non excludable, where it is impossible to stop someone from consuming a good from those who have not paid for it, and non-rivalrous, where consumption by an individual does not limit the consumption by others. Ostrom explains
She found that in some cases in Nepal and forests around the world challenged the idea that governments do a better job than individuals in the organization and protecting important resources. In addition, she explains how governments’ major goals has been making self-interested individuals achieve better outcomes. Her conclusions point to creating policy “to facilitate the development of institutions that bring out the best in humans (pg 435).” It through polycentric institutions that will help understand the complex nature and outcomes at various scales. Simplistic models, the ones she highlights and argues against because they are outdated, give a useful bird-eye view of outcomes and understandings. However, complexity, or polycentric is the best route to